IRS News

Substitute for Returns (SFRS) - When the IRS Files Taxes for You

AS we wonder how the IRS could change thru a new administration, its useful to know how the IRS has operated historically. The continuing focus for the IRS has been closing the $500 billion tax gap between what is collected and what they project "should" be collected. For at least a decade, one division has been trying to make a dent in the gap: the Automated Substitute for Return (ASFR) program.

Until 2016, a fully staffed ASFR program actively pursued non-filers. After requesting individuals to file their own tax return, the ASFR dept. would file a tax return for them, often to their disadvantage (not allowing any deductions, e.g.). These returns are called Substitute for Returns or "SFRS." Due to IRS resource depletion in 2015/2016, the ASFR program took their focus off "high dollar non-filers" and devoted most of their resources to people who had "refund holds," i.e. people who filed for a refund but who's refund was disallowed until older years were filed. In a 2017 report, TIGTA, the Treasury Inspector General identified that the switch to "refund holds" from "high dollar cases" was a waste of resources, because refund holds were often small change compared to the high dollar non-filers.

In May 2019, the IRS began to boost the ASFR program, taking on 380,000 cases. In the new go-around, the Taxpayer Advocate asked that new SFRS can be done with more consideration for obvious deductions, single or married filing status and the standard deduction. As the US government posts a $3 trillion deficit in 2019, one would think that the IRS will continue to try to narrow the Tax Gap. The ASFR program will be definitely be ramped up to pursue non-filers.

What's the easiest way for you to avoid the ASFR program? Easy. Get into tax compliance fast by filing your 2015 thru 2019 tax returns, a six-year window of compliance that soon will be adding 2020 to the mix.

Is 2024 the year to solve your tax issue? WATAX is ready to assist you now. Please call us at 1-888-282-4697 or email us a description of your tax issue and we'll contact you promptly.

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